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Argentina, China pursue shale development

Argentina and China are among the leaders in shale development in 1H 2015

Written by OilOnline Press - June 26th, 2015 | 592 Views

As recently as last year, only four countries in the world were producing commercial volumes of either natural gas from shale formations (shale gas) or crude oil from tight formations (tight oil): the US and Canada, and more recently, Argentina and China. Beyond these four countries, other countries have started exploring hydrocarbons from shale and other tight resources, but they are still short of reaching commercial production.

The 2013 World Shale Gas and Shale Oil Resource Assessment, produced by EIA and Advanced Resources International (ARI), noted large shale deposits in China and Argentina. Exploration and drilling is already underway in these countries. For the last two years, China has drilled more than 200 wells, and Argentina has drilled more than 275 wells. Each country has the potential to significantly increase production of shale gas and tight oil.

In Argentina, many international companies hold leases and have drilled wells in shale formations. Much of the initial activity has targeted shale oil and natural gas in the Neuquen Basin's Vaca Muerta shale formation, located in west-central Argentina. National energy company Yacimientos Petroliferos Fiscales (YPF), the largest shale operator in the country, reported production in April 2015 of 22,900 b/d of oil and 67 MMcf/d of natural gas from three joint ventures in Vaca Muerta: one with Chevron at the Loma Campana field, a second one with Dow Chemical at the El Orejano field, and a third joint venture with Petronas at La Amarga Chica field. In addition, China's national oil company Sinopec and Russia's national oil company Gazprom have recently signed a memorandum of understanding with YPF to jointly develop shale from the same basin.

China has targeted the Longmaxi formation in the Sichuan Basin, located in south-central China, as its initial shale gas exploration and development objective. While several international companies are active in China, much of the early effort has been led by Sinopec and China National Petroleum Corp.'s (CNPC) PetroChina, two of China's national oil companies. According to China's Ministry of Land and Resources, these two companies are on schedule to reach 600 MMcf/d of shale gas production by the end of 2015. CNPC has drilled 125 shale wells, bringing 74 of them into production, and is on schedule to produce 250 MMcf/d of shale gas by the end of this year. Sinopec has a commercial-scale effort underway at the Fuling shale gas field in the Sichuan Basin, currently producing 130 MMcf/d. By the end of 2014, Sinopec completed 75 test wells at the Fuling field, with plans to drill an additional 253 wells.

Other countries have also begun to explore shale gas and tight oil, including Poland, Algeria, Australia, Colombia, and Russia. Shale oil and natural gas exploration drilling is also underway in Mexico, particularly in the country's portion of the Eagle Ford Shale and in La Casita formation within the Burgos Basin in northeastern Mexico. In May 2015, the national oil company Petroléos Méxicanos (Pemex) released the results for 13 of its shale exploration wells, with 10 of these categorized as commercial. These 10 shale gas wells have initial production ranging from 2 to 11 MMcf/d. Pemex also drilled three horizontal wells into the Tampico-Misantla Basin's Pimienta formation in 2013, and the company plans to complete all three wells this year.